Monday, April 28, 2008

When will the Maori Party and Greens wake up to gst on food issue?

Soaring prices fuel call to end GST on foodA petition urging abolition of GST on food is gathering support outside Auckland supermarkets as consumers struggle to cope with rising prices. The cost of filling the average supermarket trolley has jumped by more than a quarter in the past year, as the effect of international food shortages hits New Zealand. A Weekend Herald comparison showed butter, cheese and some varieties of bread had more than doubled in price. Most meat, vegetables and fish were also much more expensive. Labour and National, have resisted previous calls to exempt food from GST and seem unlikely to change their minds. But many shoppers the Herald spoke to believed the Government had to act to cut the price of basic food items.

Labour and National say that they can’t remove GST off fresh food, vegetables and non-processed food, yet Britain and Australia has managed to keep taxes off these foods. The Greens and the Maori Party should be on this issue immediately – as a joint front they should go to the electorate stating that they would remove gst from these foods if they were elected – wake up Green Party, opportunity passing you by (again).

Except that due to socialist mismanagement even the modest tax cuts that we were going to get are now unaffordable. So where is that 2.4 billy coming from?

And why is it that the only way we can get Bomber to support tax cuts is when it turns a relatively simple system into something mind bendingly complex. Is trim milk healthy? Is full fat milk? Flavored milk? Soy milk? And repeat for every single other type and variation of food with the associated compliance costs to business ultimately passed right back to the consumer.

...And why is it that the only way we can get Bomber to support tax cuts is when it turns a relatively simple system into something mind bendingly complex. Is trim milk healthy? Is full fat milk? Flavored milk? Soy milk? And repeat for every single other type and variation of food with the associated compliance costs to business ultimately passed right back to the consumer.Australia and Britain have managed to answer these questions without nearly as much concern as you have created here. GST is a tax that hurts the poor most and I've never been in favour of that so my calls to remove gst from fresh food and vegetables, which I was calling for last year, shouldn't come as too much of a shock for you. It has the added bonus of helping people choose better food for them as fast food won't have the gst taken off.

I wonder about the effectiveness of this idea. While an 11.2% reduction in cost to a portion of their weekly grocery spend would be very helpful to low income families, I doubt whether it would result in marked change in eating habits.

Fresh food has always been cheaper than fast food - but so many families lack the knowledge or skills or motivation to plan and shop for a weeks meals and then prepare them.

I think it's like the idea of raising the tax rate on alcopops - it's not addressing the core issue - drink culture in the case of alcopops, food culture with the GST issue.

PS - Anon is justified in raising the complexity issue - NZ's GST system is widely praised as one of the simplest goods tax currently in operation. I don't think the added complexity is neccesarily a deal breaker as far as progressing this idea, but it should be recognised as an issue that would need to be addressed.

I recall that Australia wasted its time on vigorous debates over whether adding fruit to bread made it worthy of a tax break. The two countries that you mention are the exceptions and not the rule. The fact is that it is much simpler, and more common internationally, to tax everything or failing that lift the tax on all food .

If the problem is that poor people need more money to spend then that can be easily solved by dropping either the rate of GST or the lower tax rate.

Don't forget the fact that with every increase in food and fuel prices the governments GST tax take increases as well. Cullen and Clark etc are very quiet on this fact.I wonder just how much additional tax have been taken due to rising prices on food and fuel? Perhaps someone out there can calculate it?

Don't forget the fact that with every increase in food and fuel prices the governments GST tax take increases as well. Cullen and Clark etc are very quiet on this fact.I wonder just how much additional tax have been taken due to rising prices on food and fuel? Perhaps someone out there can calculate it?

The GST take really only goes up when the profit goes up, so a rise in prices doesn't necessarily equal more GST in the Government coffers.

For things like diary (where the increase is primarily driven by the high prices overseas) then yes, there would be more net GST.

But for things like fruit and veg (where the increase is primarily driven by higher production costs) the net GST take remains about the same as the producer is able to claim more GST back on their higher production costs.

... Puppy Cuddles said...I wonder about the effectiveness of this idea. While an 11.2% reduction in cost to a portion of their weekly grocery spend would be very helpful to low income families, I doubt whether it would result in marked change in eating habits.Firstly it's 12.5% not 11.5% - and yes I believe that a Government has a responsibility to make the purchasing environment as easy as possible for people to make the right choices on food - so I doubt your doubt.

Fresh food has always been cheaper than fast food - but so many families lack the knowledge or skills or motivation to plan and shop for a weeks meals and then prepare them.While you make a good point about peoples skills being low (these are being addessed by education campaigns aimed at Mums and Kids to cook healthier) - your claim that fresh food is cheaper than fast food simply isn't true - fast food is cheaper because of mass production that lowers costs.

I think it's like the idea of raising the tax rate on alcopops - it's not addressing the core issue - drink culture in the case of alcopops, food culture with the GST issue.Where as I think a Government has the resposnibilty of stepping in and making changes that make it more difficult to buy certain products that aren't good for you.

PS - Anon is justified in raising the complexity issue - NZ's GST system is widely praised as one of the simplest goods tax currently in operation. I don't think the added complexity is neccesarily a deal breaker as far as progressing this idea, but it should be recognised as an issue that would need to be addressed.GST is also unfair on the poor, so I don't rate that priase very highly.

Anonymous said...I recall that Australia wasted its time on vigorous debates over whether adding fruit to bread made it worthy of a tax break. The two countries that you mention are the exceptions and not the rule. The fact is that it is much simpler, and more common internationally, to tax everything or failing that lift the tax on all food .They can do it which proves we can - despite your best attempts, you can't dilute that fact.

If the problem is that poor people need more money to spend then that can be easily solved by dropping either the rate of GST or the lower tax rate.The money we lose in GST revenue will be saved from the Health budget as our diet moves away from fast food to fresh food.

Anon (1.40PM) fair point about Bomber. Here's a thought Bomber reduce your ecological footprint by eating less.Ummmmm - Anon, I have never owned a car, I walk and use mass transport everywhere I go - my global footprint is incredibly low - attempting to attach my weight to the issue is so purile I understand why you have posted anonymously. You have no honour, move along please, try Kiwi Blogh

your claim that fresh food is cheaper than fast food simply isn't true - fast food is cheaper because of mass production that lowers costs.

I believe you are incorrect here. This would be true if you were talking about individual one off meals, however I manage to eat 3 healthy meals per day for less than $70 per week - that's 21 meals give or take, and my cupboards and freezer aren't totally empty come shopping day.

At Mcd's, for example I spend at least $7 per meal on the odd occasion that I go there which amounts to only 10 or so meals on my $70 weekly food budget.

A family pack at KFC starts at around $20 - You could easlily feed a family a much healthier meal for that price.

And I buy food only for myself - if I had more mouths to feed I could by cheaper in bulk myself and family e.g. looking at foodtown prices (there are cheaper options) buy a tray of 30 eggs for a family @ 7.99 which would be cheaper per person than the 1/2 dozen @ $2.05 that I buy for myself. It is the same for most food goods.

I simple do not believe the healthy food is more expensive than fast food argument.

...Hmmmm - okay, let's say I accept your figures and the amounts you use as being true (there's little reason you would lie about this right) walk me through the issue of a solo mother with let's say 3 kids - those on the bottom of the rung - the very people you want to try and help.

So what are we talking here - would we say $70 groceries x 4 family members? That's $280 worth of groceries, but let's for fairness suggest you can cut back on a few dollars by buying in bulk - Let's go for $250 worth of groceries per week up against - $20 fish and chips x 7nights = $140

I can buy a pie for $1. If I ate 2 pies for every meal that comes to $42. Halve that for 2 packets of noodles for every meal. Nether option is healthy, yet I could conceivably sustain myself on $21 a week. Tell me how I could eat healthily for that?

$140 a week for seven dinners doesn't allow anything for breakfast, lunch and snacks. I'd be surprised if you could feed a family of 4 the other 14 meals on the remaining $110 - and certainly not on fast food.

Hmmmm - okay, let's say I accept your figures and the amounts you use as being true (there's little reason you would lie about this right) walk me through the issue of a solo mother with let's say 3 kids - those on the bottom of the rung - the very people you want to try and help.

So what are we talking here - would we say $70 groceries x 4 family members?

I think it's a mistake to assume that the 3 children would require $70 per week - I'm a full grown adult and I would eat much more than one child.

That's $280 worth of groceries, but let's for fairness suggest you can cut back on a few dollars by buying in bulk - Let's go for $250 worth of groceries per week up against - $20 fish and chips x 7nights = $140

Your reply to this?

With my $70 I'm getting breakfast, lunch and dinner - your $140 is still only buying 7 meals for each family memeber and at $20 per meal it is hardly value for money.

But anyway - all these prices are from the foodtown website - I shop at pak n save which I know to be cheaper but here's what I've come up with after about 10 minutes looking:

$7.14 for 5.50gm of mince$2.99 for jar of chunky home brand pasta sauce $0.93 for 500g dry spaghetti

That's a simple, and healthier dinner that would feed this family of 4 for $11.06 - or $2.77 per person - and it wouldn't take much more than half an hour to prepare.

$6.09 for a healthy vege soups that would be dinner one night and lunch the next day (could be frozen for another time)

Breakfast-Bananas $2.58 1kg Weetbix $6.29 1kg Milk $4.59 3l At $13.46 that would be more than enough to cover breakfast for a week for this family - all for less than one unhealthy meal of fish and chips

With 3 children I would say that you would have plenty left over here but any - $22.77 would cover 7 lunches for our family.

So assuming we are spending a similar amount on each dinner that is around $115 for our family of one woman and three children for a week. At that rate you could afford to have fish and chips for a treat one night a week. Not the most exciting diet and it could probably be healthier although it is certainly healthier and cheaper than fast food.